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State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
State of renewal:
                Charting a new course for Indiana’s
                economic growth and inclusion

                EXECUTIVE SUMMARY

Mark Muro, Robert Maxim, and Jacob Whiton
with Yang You, Eli Byerly-Duke, and Monica Essig Aberg

February 2021
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

             EXECUTIVE SUMMARY

There’s been no escaping the COVID-19 pandemic, with its toll of
hospitalizations, layoffs, and quarantines.

Every place in America has been affected, often in drastic ways, as the
coronavirus hit home and laid bare—like an X-ray—an array of underlying
economic and social challenges wherever it arrived.

And so it has been in Indiana. While it has managed, by some measures, one
of the stronger recoveries from the initial crisis among states, the Hoosier
State has also contended with major dislocations and challenges.

Not only did COVID-19 interrupt several years of relatively decent growth prior
to the pandemic shock, but the pandemic and its impacts have intensified
an array of concerns about the underlying health and resilience of the state’s
economy, ranging from its technological competitiveness (region by region)
to its adaptability to the pay of its jobs.

Brookings Metropolitan Policy Program                                     Page 2
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

In light of this, as Hoosiers begin to think ahead, the       1. INDIANA POSSESSES SIGNIFICANT
understandable impulse to simply “get back to normal”         STRENGTHS AS IT MOVES BEYOND THE
may not suffice.                                              WORST OF THE COVID-19 PANDEMIC,
                                                              THOUGH DISPARITIES PERSIST.
Instead, Indiana—like other states—is facing a critical
moment as it contemplates its post-pandemic future.           Notwithstanding its especially deep initial plunge
Is the state prepared to challenge itself to go beyond its    into the COVID-19 recession, Indiana was
norms and focus on longer-term transformation? Or will        experiencing a relatively robust initial job rebound by the
it content itself with reverting to an imperfect pre-crisis   onset of the winter. Overall, the state’s return from its
status quo?                                                   pandemic lows has been relatively quick, with net payroll
                                                              job losses for the year declining to 52,000 positions in
Such questions—which were already surfacing before
                                                              November—or -1.7% of the state’s total employment, the
the pandemic—are why in spring 2019, the Central
                                                              ninth-lowest figure among states.
Indiana Corporate Partnership (CICP) invited the
Brookings Institution’s Metropolitan Policy Program           Contributing to this result has been the state’s
to provide a data-grounded economic assessment                industry structure. With services at the forefront of job
and actionable set of recommendations to inform               losses nationally, the state’s high specialization in
the state’s economic strategy at an important time.           manufacturing (which reopened relatively quickly)
Envisioned as part of the Indiana GPS Project—a               and low reliance on tourism (a source of some
multistrand economic strategy effort spearheaded by           of the crisis’s worst job losses) have ensured
CICP, assembling research from Brookings as well as           that Indiana has been shielded from the gravest
the American Enterprise Institute (AEI) and its partner       disruptions of the pandemic. Indiana’s large
Economic Innovation Group (EIG), both in Washington,          transportation sector (including fulfillment and logistics)
D.C.—the Brookings assessment and recommendations             has also contributed to the state’s rebound, meaning
were conceived well before the COVID-19 crisis with           that—for now, at least—the state’s sizable “make goods/
an eye toward providing ideas for expanding Indiana’s         move goods” sector has been important in staving
advanced industries and quality employment. With that         off dislocation.
said, the inquiry only gained in salience by taking on
                                                              Still concerning, though, is the persistent unevenness of
aspects of the current crisis.
                                                              the recession, which continues to vary sharply across
Along these lines, the report that follows—“State of          income levels, race, and geography. Data from
renewal: Charting a new course for Indiana’s economic         Opportunity Insights reveals, for example, that while
growth and inclusion”—draws a number of conclusions           high- and medium-wage workers in Indiana have seen
about the Indiana economy as it emerges from the              full or nearly full employment recovery, in October, low-
COVID-19 crisis and considers how to catalyze a new           wage workers were still contending with employment
era of state growth. In doing so, the report finds that:      rates more than 17% below mid-January 2020 levels.

  “State of renewal: Charting a new course for Indiana’s economic growth and
  inclusion”—draws a number of conclusions about the Indiana economy as it
 emerges from the COVID-19 crisis and considers how to catalyze a new era of
                                 state growth.

Brookings Metropolitan Policy Program                                                                             Page 3
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

By the onset
Figure        of winter,
       1. By the  end ofIndiana’s
                         November,relatively
                                     Indianastrong  rebound 87%
                                              had recovered had gained  backit87%
                                                                of the jobs    lost of
                                                                                    in jobs
                                                                                       2020,the state had
                                                                                              though      lost
                                                                                                      gains    in
                                                                                                            were
2020, although   the
slowing by year’s endrecovery slowed   in the fall
Total nonfarm employment in Indiana and US, not seasonally adjusted, February - November 2020

             Feb        Mar         Apr          May      Jun        Jul        Aug       Sep        Oct        Nov
   0%

  -2%

  -4%

  -6%

  -8%

 -10%

 -12%
                                                                                                        Indiana
 -14%
                                                                                                        United States
 -16%

Note: November data is a preliminary estimate.
Source: Brookings analysis of BLS data.

Likewise, responses from the Census Bureau’s                    The vulnerabilities begin with growth and pay. On
Household Pulse Survey for mid-December report that             employment, the state’s 0.5% compound annual
half of Black and Latino or Hispanic Hoosiers resided in        growth rate (CAGR) in employment from 2007 to 2019
households that had experienced a loss of employment            reflects a mixed story. As such, the state’s employment
income since March. For white Hoosiers, the                     growth lagged the national average of 0.8%, with the
figure was 44%. And while unemployment rates in                 state having initially absorbed heavy job losses in
Indiana’s regions had declined substantially by the             manufacturing in the 2007-to-2009 recession. However,
fall, conditions varied and joblessness was                     an export-driven manufacturing rebound then helped
still elevated, especially in the state’s northern              the state outpace its peer states’ employment growth. In
regions. Even so, the state’s initial rebound has               that sense, while employment growth has been slow
been relatively solid.                                          by national standards, it has been above average for a
                                                                Midwestern region still struggling with a regionwide loss
2. WITH THAT SAID, INDIANA’S PRE-
                                                                of economic vitality.
PANDEMIC EMPLOYMENT AND PAY TRENDS
RAISE QUESTIONS ABOUT THE LIKELY                                At the same time, though, earnings gains have
SHAPE OF ITS POST-PANDEMIC RECOVERY.                            underperformed. Nationwide, median annual earnings
                                                                increased by just 0.6% a year in real terms from 2007 to
Indiana’s pre-crisis norms on growth and
                                                                2019, to reach $36,600 per worker. By contrast,
pay, past recession recoveries, and family well-
                                                                Indiana’s gains were half that, with annual earnings
being signal vulnerabilities in the state’s economic
                                                                growth registering at just 0.3%, allowing earnings to
makeup, with implications for the nature of its longer-
                                                                reach just $34,300. Only in the last pre-pandemic
term recovery.
                                                                years did Indiana workers’ earnings begin to grow
                                                                in a sustained way, albeit at a slower pace than that
                                                                of its peers.

Brookings Metropolitan Policy Program                                                                             Page 4
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

Indiana
Figure 5.managed  respectable
          While Indiana added employment    growth
                              jobs faster than      in the
                                               its peer    pre-pandemic
                                                         states in the lastdecade,
                                                                            decade,but  its earnings
                                                                                    it still          gains
                                                                                             lagged the nation as a
underperformed
whole
Total nonfarm employment (Dec. 2007 = 100), seasonally adjusted, December 2007 - January 2020

115

110

105

100

 95

 90
      2007    2008      2009      2010      2011      2012      2013      2014      2015     2016      2017      2018    2019

                                         Indiana          Peer States            United States

Source: Brookings
Figure  6. Indianaanalysis
                   earningsof BLS data.
                               gains underperformed through the pre-pandemic decade
Real median hourly wage (2007 = 100), 2007 - 2019

115

110

105

100

 95

 90

 85
   2007       2008      2009      2010     2011      2012      2013      2014       2015     2016      2017      2018    2019

                                         Indiana         Peer States            United States

Source: Brookings analysis of BEA and the Economic Policy Institute’s State of Working America Data Library data.
Source: Brookings analysis BLS, BEA and the Economic Policy Institute’s State of Working America Data Library data.

Brookings Metropolitan Policy Program                                                                                   Page 5
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

Also of concern are longer-term trends, including the         slow recoveries from these episodes represent a second
state’s experiences with recent recessions—an                 caution about the future.
important indicator of resilience. Notwithstanding
                                                              Finally, the human costs of two decades of
its sustained employment-growth edge compared to
                                                              stagnation represent a third source of uncertainty
its regional peers, Indiana found itself knocked onto a
                                                              about what comes next. With the onset of the Great
slower growth trajectory after 2000, to the point that
                                                              Recession, for example, the number of Hoosiers living in
the state did not recover its May 2000 employment
                                                              families that struggled to make ends meet—as indicated
peak until May 2015. The nation as a whole, by contrast,
                                                              by a well-regarded “self-sufficiency standard” from
recovered its February 2001 peak employment only four
                                                              the University of Washington—rose by over half a
years later.
                                                              million people, from 1.4 million in 2007 to 1.93 million in
Even more disturbing, real hourly wage growth in              2011. By 2016, that total had fallen only slightly to 1.82
Indiana has remained depressed since 2001, including          million—a figure still nearly 400,000 people higher than
in the wake of the 2007-to-2009 recession. Since 2000,        before the recession.
Indiana’s 0.5% per year real median wage growth
                                                              Altogether, about 30% of the state’s population has been
trailed the national and peer-state rates and ranked
                                                              living in a struggling family since 2010, with only small
46th among states.
                                                              declines in recent years—and this was before the onset
Together, the shocks of 2001 and 2007 to 2009 imposed         of the COVID-19 pandemic. Less educated workers in
major changes upon Indiana’s economy—especially the           the state and racial and ethnic minorities are especially
2001 recession, which corresponded with a surge               overrepresented among the now likely swollen ranks of
of cheap imports from China in the wake of its                the struggling.
accession to the World Trade Organization. The

Indiana
Figure 7.employment growth deteriorated
          Indiana employment            in the wake
                             growth deteriorated  in of
                                                     thethe recessions
                                                          wake          of 2001 and
                                                               of the recessions    2007 to
                                                                                 of 2001 and2009
                                                                                             2007 to 2009
Total nonfarm employment (Jan 1990 = 100), seasonally adjusted, January 1990 - January 2020
150

140

130

120

110

100

 90
   1990       1992      1995      1997      2000    2002    2005     2007      2010     2012     2015     2017     2020
                                          Indiana      Peer States          United States

Source: Brookings analysis of BLS data.

Brookings Metropolitan Policy Program                                                                             Page 6
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

The upshot is clear: As it anticipates recovery from the       These “crown jewel” industries operate in every
COVID-19 recession, Indiana does so having lost ground         Indiana region and county and support—both directly
over the last two business cycles on several topline           and indirectly—inordinate shares of the state’s best-
indicators of economic resilience.                             paying, highest-value economic activity. However,
                                                               these high-productivity industries have also
3. ‘PREEXISTING CONDITIONS’ AFFECTING
                                                               been stagnating. Between 2007 and 2019, advanced-
AT LEAST THREE KEY SUCCESS
                                                               industry productivity in Indiana grew at a paltry 0.4%
FACTORS UNDERLIE THE STATE’S
                                                               annually, from $285,100 to $298,300 per worker. By
TRENDS AND PRESENT CHALLENGES TO
                                                               comparison, real output per worker in advanced
ITS RESILIENCE.
                                                               industries across the nation grew 2.7% a year during this
Work at Brookings and elsewhere has explored the               period, reaching $375,000 per worker in 2019—implying
special importance to prosperity of a short list of            a productivity gap of nearly 20% between the state and
critical economic success factors. These factors               the nation. This represents a fall from the state’s slight
include the dynamism of high-value “advanced”                  advanced-industry sector productivity advantage in 2007
industries, the ability of the economy to “reallocate”         of 5%.
jobs and workers from declining pursuits to promising
ones, and the importance of inclusive growth that is           Advanced industries support quality employment—albeit
broadly shared by all people and places. Such factors          at different concentrations—in all Indiana counties and in
represent not just important takeaways from the                every region
resilience literature, but key influences on Indiana’s long-   Employment share in advanced industries by region, 2019
run vitality—or lack thereof. They are the state’s
“preexisting conditions” when it comes to recovery                                                            5.3% - 7.5%
and enhancement.                                                                                              7.6% - 10.0%
Indiana faces challenges on several of                                                                        10.1% - 12.5%
these important economic factors. Three
                                                                                                              12.6% - 15.0%
findings warrant notice:
                                                                                                              15.1% - 22.8%
Advanced-industry sector competitiveness—
reflected in productivity trends—has been
slipping
Industry and firm productivity growth—the efficiency
by which enterprises convert inputs into outputs—
is critical to prosperity, but it has been declining
in Indiana. Economy-wide, efficiency has slumped to
                                                                                                                Regional employment share
levels around 15% below the national level. Especially                                                          Advanced industries, 2019
concerning are slippages in the performance of the
state’s advanced-industry sector—a collection of 46                                                               5.3% - 7.5%
                                                                                                                  7.6% - 10%
R&D- and STEM-worker-intensive industries in Indiana                                                              10.1% - 12.5%
highlighted by Brookings and ranging from biopharma                                                               12.6% - 15%
                                                                                                                  15% - 22.8%
manufacturing and medical devices to automotive, R&D
consulting, and technology.

                  © 2021 Mapbox © OpenStreetMap
                                                               Source: Brookings analysis of Emsi data.

Brookings Metropolitan Policy Program                                                                            Page 7
State of renewal: Charting a new course for Indiana's economic growth and inclusion - Brookings Institution
EXECUTIVE SUMMARY

Indiana’s
Figure 17.advanced
           Indiana’sindustries
                     advanced productivity  growth hasgrowth
                               industries productivity been languishing,  falling the
                                                              has fallen behind   behind  the nation’s
                                                                                      nation’s         since 2010
                                                                                               since 2010
Advanced industries productivity - Percent change since 2007, 2007-2019

40%
35%
30%
25%
20%
15%
10%
 5%
 0%
-5%     2007     2008      2009     2010     2011     2012   2013   2014     2015     2016    2017     2018    2019
                                                   Indiana      United States

Source: Brookings analysis of Emsi and BEA data.

The state has struggled to adapt to recent                   Analysis in this report suggests the pandemic recession
economic shifts, which have created                          could portend new reallocation challenges tied to long-
multiple “reallocation” challenges for                       term structural changes and disruptions, such as more
industries and workers                                       losses in manufacturing or the shift of retail activity
                                                             from physical stores toward e-commerce. What’s more,
Indiana’s heavy specialization in manufacturing ensured
                                                             research from AEI’s partner, the Economic Innovation
that major changes in that sector—ranging from
                                                             Group, places Indiana 39th in the nation when it
globalization and import competition to automation—
                                                             comes to the share of its employees working at new
brought significant firm and worker shifts in the last
                                                             firms. That raises questions about the state’s ability to
two recessions. For example, between 2001 and 2019—
                                                             readily create new jobs to replace those that may have
and especially in the recessions of 2000 to 2001 and
                                                             been lost for good.
2007 to 2009—the state lost over 72,000 jobs in the
manufacturing sector, which has long been a source of        Indiana’s economy has been providing too few
above-average wages for workers without a four-year          good jobs
college degree. At the same time, 228,000 jobs were
                                                             Good-paying work is critical in providing workers
created in the lower-paying hospitality, administrative
                                                             and families a livelihood and delivering the basic
services, and health care sectors.
                                                             consumption that supports prosperous regions and
The result of these shocks: Indiana’s firm mix               communities. Accordingly, Brookings suggests—
shifted abruptly toward low-skill service sectors,           based on extensive research in Indiana—that “good
while thousands of workers struggled to undergo tough        jobs” pay at least a locally adjusted $40,700 a
changes in jobs, industries, and skill demands, with a       year and provide employer-sponsored health
long-term depressive effect on wage growth and labor         insurance. Under this metric, Indiana’s store of good
force participation.                                         jobs has remained too small and grown too slowly.

Brookings Metropolitan Policy Program                                                                          Page 8
EXECUTIVE SUMMARY

To be sure, the state’s stock of good jobs                       Insufficient digital investment
compares favorably to most states, given Indiana’s               is limiting advanced-industry sector
manufacturing history. But even so, only 42% of the              competitiveness and the state’s broader
state’s workforce possessed a good job between                   productivity
2014 and 2018, the most recent period for which
                                                                 Underlying Indiana’s productivity challenge are digital
numbers are available. That means that roughly 58%
                                                                 challenges. Information technology (IT) adoption is an
of Hoosier workers—nearly three out of five—lacked a
                                                                 increasingly important influence on productivity patterns
good job then.
                                                                 given the “digitalization of everything” in the COVID-19
Nor has the share of Hoosier workers in a good                   economy. And yet, digitalization has been proceeding
job increased appreciably in the last decade. Rather, it         too slowly in Indiana, to the detriment of productivity
has remained the same. Also holding steady                       growth.
is Hoosiers’ uneven access to good jobs: While 50% of
                                                                 For one thing, Indiana ranks in the bottom third of
male workers in Indiana are employed in a good job,
                                                                 states on Brookings’s basic measure of economy-
only 33% of female workers are. Similar disparities cut
                                                                 wide digitalization as reflected by the average digital
across racial lines: Over 44% of white workers in the
                                                                 intensity of its occupations. In addition, information on
state have a good job, compared to just 30% and 25% of
                                                                 Indiana firms’ capital expenditures depicts significant
Black and Latino or Hispanic workers, respectively.
                                                                 underinvestment in IT. Specifically, firm-level data
                              *                                  from the tech-industry market research company
                                                                 Harte Hanks shows that in 2016, Indiana ranked
Going deeper into these success factors reveals
                                                                 just 37th among states for both its advanced-
several underlying dynamics that point to important
                                                                 industry sector and whole-economy annual per
strategy challenges—and opportunities.

Men,
Figurewhite workers,
       37. Men,  whiteand  prime-age
                        workers,  and or older workers
                                      prime-age        have
                                                 or older   greater
                                                          workers   access
                                                                   have     to good
                                                                        greater     jobs;
                                                                                access to women, workers
                                                                                          good jobs;     of color,
                                                                                                     women,
and young
workers  of people  have
            color, and   less access
                       young  people have less access
Share of workers in a good job by demographic group in Indiana, 2014-2018

 60%

          50.3%
                                                                                                       48.6%
 50%                                                                                                               46.9%
                                             44.4%

 40%
                      32.9%
                                                         29.6%
 30%                                                                25.1%

 20%

 10%                                                                                        7.5%

  0%
           Male      Female                  White       Black     Latino or                18-24       25-54       55+
                                                                   Hispanic

Note: Asian American, Native American, Native Hawaiian, and those identifying as two or more races cannot be included because
small sample sizes prevent statistically significant estimates.
Source: Brookings analysis of IPUMS USA 2014-18 5-year ACS microdata.

Brookings Metropolitan Policy Program                                                                                  Page 9
EXECUTIVE SUMMARY

employee IT spending. Those levels—$12,300 and              Job quality has suffered amid difficult
$7,400, respectively, compared to $25,000 and               economic transitions
$11,100 nationally—ranked fifth and sixth among
Indiana’s peer states.                                      Beneath the shortage of good jobs lie massive
                                                            economic changes that have challenged state policy’s
Similarly patchy are Indiana’s broadband adoption rates,    ability to keep up. For example, the interlinked trends of
which interfere with business, job search, and education    globalization and automation have constrained mid-level
in both rural and urban areas. To be sure, Indiana’s        wage gains in Indiana more than in most places. Here, it
broadband adoption rate has increased from 60% to           bears saying again that trade and technology each bring
65% since 2013. However, the state’s 65% adoption rate      substantial benefits. But it is also true that each trend
remains in the fourth quintile of states—a concerning       has almost certainly had negative wage effects on
status that has been highlighted by the pandemic            middle- and lower-skilled workers, especially given the
recession.                                                  state’s manufacturing-heavy industry mix.
Thinner job supplies and various skill- and                 On trade, Brookings analysis using a method and
job-matching issues could slow worker                       data from economist David Autor and colleagues
transitions and wider reallocation                          suggests that, between 1990 and 2007, Hoosier wage
This is a problem because fast                              declines attributable to Chinese import competition
and favorable readjustments of firms and                    were the highest in the Midwest, and the ninth-largest
workers to new conditions speed recovery and                in the country. On technology, Brookings calculations
maximize productivity and inclusive growth. But             using data from the International Federation
particular attributes of Indiana’s reallocation             of Robotics and economists Daron Acemoglu and
environment could slow or complicate the state’s job        Pascual Restrepo suggest automation-induced wage
creation and labor market matching processes in the         declines over the same timespan were likely higher than
coming years.                                               in any other state. Brookings also concludes that nearly
                                                            one-third of Indiana jobs are now highly susceptible
On the job creation side, shortages in new-firm             to automation employing existing technologies—the
creation and investment in digital and other                highest share in the country.
automation technologies could depress the state’s
supply of jobs in certain sectors or places. On the         Over time, these trends have helped to “hollow out” the
labor market side, skills disconnects—a problem             state’s wage distribution, erasing middle-class jobs
everywhere—could slow job transitions and                   and forcing displaced workers to compete for lower-
readjustment. For some, matching existing skills to         wage service work. The same can be said for related
new firms or industries will require challenging job        management paradigms involving outsourcing
searches. For others, the tendency of firms to upskill      and the so-called “contingent” or gig economy,
during downturns could complicate reemployment              which have complicated workers’ ability to secure
in enterprises replacing workers who performed              higher wages and more benefits. In the face of all
“routine” automatable tasks with a mix of technology        of this, Indiana policy innovation has simply lagged
and more skilled workers. Even before the crisis, a third   behind market changes, leaving many workers to
of Indiana jobs required postsecondary education, but       contend with excessively low wages, benefits limits, and
only a quarter of working-age adults had that requisite     greater precariousness.
level of education.
Meanwhile, telework—which will likely
increase permanently—poses additional challenges,
particularly for workers who lack digital skills or
broadband access.

Brookings Metropolitan Policy Program                                                                        Page 10
EXECUTIVE SUMMARY

4. INDIANA SHOULD BUILD RESILIENCE                             For their part, regional actors and local industry
INTO A RECOVERY THAT PROMOTES TRUE                             networks can play a critical role in helping the state raise
RENEWAL.                                                       digital awareness, deliver digital skills development, and
                                                               begin to tackle local broadband challenges.
Indiana has an opportunity to elevate its
trajectory. But to do that, it needs to do more than just      Promote favorable job creation and worker
manage a serviceable recovery from the immediate               transitions to allow for a beneficial “rewiring” of the
COVID-19 shock and recession.                                  economy. Favorable industry and work reallocations—
                                                               from less desirable to more desirable configurations—
Rather, the state needs to begin to address some
                                                               are going to be crucial for the economy to change and
of the deeper economic challenges it faced prior to
                                                               adapt while helping displaced workers reconnect to
the pandemic that could limit the dimensions of its
                                                               sustainable work. Top priority moves would:
recovery. Indiana should shoot for enhancement—not
just repair.                                                   •   Leverage incremental income tax gains to
                                                                   fund regional advanced-industry sector growth
Specifically, the state should begin improving its
                                                                   initiatives, with investments delivered by both the
standing on key resilience factors by taking action
                                                                   state and regional intermediaries
to accelerate technology adoption, facilitate faster
industry and worker adaptation, and promote economic           •   Enhance entrepreneurship and small new
inclusion.                                                         business development, with a focus on
                                                                   entrepreneurs of color
Along these lines, the state should consider a number
of linked initiatives and action steps aimed at both           •   Better leverage unemployment insurance (UI)
mitigating the worst of the crisis and systematically              and work-sharing to boost employment
upgrading the state’s growth platform for the next                 and economic growth
decade. Specifically, the state and its regional, civic, and
                                                               •   Promote more effective worker adjustment by
business partners should take steps in the coming year
                                                                   continuing to support the Next Level Jobs program
or two to:
                                                                   and the Workforce Ready Grant
Accelerate digital adoption to drive economic
                                                               In addition, the state should in the next few
dynamism and competitiveness. Promoting faster
                                                               years more strongly support workers’ searches for the
and broader digital adoption remains one of the
                                                               right job and employer as the economy recovers and the
best ways to rout the state’s productivity slump and
                                                               labor market tightens. To do so, the state should:
generate quality jobs and more dynamic prosperity. The
state should pursue three initiatives:                         •   Enhance work connections with a statewide online
                                                                   matching platform
•   Drive digital adoption with a “Digital
    Indiana” initiative to deploy an awareness campaign        For their part, regional actors and local
    and business support offerings to increase IT              industry networks can continue to drive growth in
    adoption by Indiana firms—especially small and             their own advanced sectors while designing, aligning,
    medium-sized enterprises—in all industries, as             and delivering industry-relevant, worker-supportive
    does the state’s EASE program and Manufacturing            education, training, and job-matching innovations.
    Readiness Grants in that sector
                                                               Do more to support workers who aren’t in good
•   Encourage digital skills development for Hoosiers          jobs so as to promote inclusion and broadly shared
    by adding a digital skills requirement to the Indiana      prosperity. Neither a broad digital surge nor facilitating
    College Core (formerly the Statewide Transfer              optimal reallocation of the economy and labor market
    General Education Core)                                    will by themselves be sufficient to help the state’s
                                                               struggling workers. Large forces—including globalization
•   Begin to solve the state’s broadband disconnects
                                                               and technology—will continue to pose challenges for the

Brookings Metropolitan Policy Program                                                                             Page 11
EXECUTIVE SUMMARY

widespread creation of good jobs, whether in Indiana        In addition, the state may want in the coming years
or elsewhere. Therefore, Indiana—like every other state—    to examine a number of other recommendations that
will need to accept that it must attend more to the basic   would help boost job quality for low-income Hoosiers. In
needs of what will likely be a sizable pool of struggling   that spirit, the state could:
workers for the foreseeable future. In that vein, the
                                                            •   Enact statewide paid sick and family leave
state could:
                                                            •   Expand access to benefits and protections
•   Establish a “Choice Employers” designation
                                                                to contingent workers, gig workers, and
    and provide such employers with
                                                                independent contractors
    premium supports to encourage them to
    create more good jobs                                   •   Enact protections for temporary and on-call workers
•   Enlarge the state’s existing Earned Income              For their part, regional organizations and local
    Tax Credit and pay it quarterly to boost worker         business networks can focus on good jobs in their own
    income and predictability                               communities and experiment with new ways to support
                                                            good wages and provide both educational pathways and
•   Authorize a state panel to explore a Medicaid buy-in
                                                            supportive services for working families.
    program for able-bodied adults
•   Enact a comprehensive child care agenda to
    support working families
•   Enact a state-sponsored automatic IRA to
    encourage greater retirement savings

Indiana has an opportunity to elevate its trajectory. But to do that, it needs to do
 more than just manage a serviceable recovery from the immediate COVID-19
  shock and recession. Rather, the state needs to begin to address some of the
 deeper economic challenges it faced prior to the pandemic that could limit the
   dimensions of its recovery. Indiana should shoot for enhancement—not just
                                      repair.

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ACKNOWLEDGEMENTS
The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its
mission is to conduct high-quality, independent research and, based on that research, to provide innovative,
practical recommendations for policymakers and the public. As such, the conclusions and recommendations of any
Brookings publication are solely those of its authors, and do not reflect the views of the Institution, its management,
or its other scholars.

The Brookings Metropolitan Policy Program (Brookings Metro) would like to thank the Central Indiana Corporate
Partnership (CICP), BioCrossroads, and the Lilly Endowment Inc. (LEI) for their generous support of this analysis
and of Brookings’s advanced economy work more broadly.
Sincere thanks for ongoing input and counsel go to David Johnson of CICP as well as to Clay Robbins, Robert
Smith, and Jaclyn Dowd at LEI; Jason Kloth of Ascend Indiana; Patty Martin at BioCrossroads; and Mark Howell of
Conexus Indiana.
The Brookings team is also grateful to Ryan Streeter of the American Enterprise Institute for his counsel and good
cheer.
Additional invaluable input and practical support in Indiana were provided by Lori Leroy, Nathan Ringham, and
Melissa Roberts at CICP.

More broadly, the Brookings Metro team has relied on a rich flow—even during the pandemic—of both structured
and informal consultation with a helpful, thoughtful, and committed array of Indiana stakeholders.
The GPS Project Advisory Council provided a helpful sounding board throughout the research process and merits
our sincere appreciation: Keira Amstutz, Kevin Brinegar, Jaclyn Dowd, Sue Ellspermann, Tim George, Starla Hart,
Teresa Lubbers, Justin McAdam, John Ruckelshaus, Robert Smith, and Ryan Streeter.
An outstanding set of regional leaders convened two focus groups in all 11 Indiana regions, read draft material, and
merited additional gratitude. These leaders included:
Northwest: Heather Ennis, Jená Bellezza, Linda Woloshansky, Denise Dillard
North: Regina Emberton, Pete McCown
Northeast: John Sampson, Ryan Twiss
Wabash Heartland: Pat Corey, Johnny Park
Central: Mark Fisher
East Central: Delaina Boyd, Tom Kinghorn
West Central: Rob Coons
Southwest: Jim Ryan
Indiana Uplands: Tina Peterson
Southeast: John Burnett, Kathy Oren
South: Linda Speed

Brookings Metropolitan Policy Program                                                                        Page 13
And the team relied continuously on the expertise of dozens of committed Hoosiers and others, including: R. Scott
Appleby, Desmond Amuh, Regina Ashley, John Axelberg, Bob Behning, Jeanna Berdel, Brad Bishop, Luke Bosso,
Stephanie Bothun, Kate Broshears, Caitlin Brown, Bryce Carpenter, Angela Carr Klitzsch, Dawn Clark, Matt Crouch,
Jackie Cuellar, Wendy Dant Chesser, Scott Davison, Merritt Dilts, David Ebert, Claire Fiddian-Green, Kenan Fikri, Mark
Fisher, Scott Ford, Thomas E. Fuja, Roberto Gallardo, Tom Gates, Jodi Golden, Julie Goodman, Robert Goosen,
Nathan Hartman, Brock Herr, Michael Hicks, Mackenzie Higgins, Michael Huber, Kathy Huffman, Saru Jayaraman,
Leighton Johnson, Drew Klacik, Mitch Landess, Mike Langellier, Chris R. Lowery, Chauncey Lennon, Douglas
Mansfield, Molly Martin, Tony Mason, Konnie McCollum, PJ McGrew, Geoffrey S. Mearns, Jamie Merisotis, Steven
Meyer, Blair Milo, Kara Monroe, Paul Mitchell, Ian Nicolini, Ray Offenheiser, Margo Olson, Mark Partridge, Umesh
Patel, Charles Penquite, Jr., Tim Raper, Aaron Renn, Joshua Richardson, Brad Rhorer, Denise Riedl, Dave Roberts,
Carol Rogers, Scott Rudd, Greg Taylor, Stacy Townsley, Yamila Ruiz, Ken Sauer, Paige Shevlin, Jeffrey H. Smulyan,
Brian Stemme, David Terrell, Travis Thiex, Bill Turner, Michael Ursem, Lawrence Walter, Mark Wasky, Chris Watts, and
Maureen Weber.

Closer to home, the authors would also like to thank the following colleagues for substantive input: Alan Berube,
Annelies Goger, Tracy Hadden Loh, Amy Liu, Joseph Parilla, and Adie Tomer.
In addition, we are grateful for the practical help of Jade Arn, Kim Bright, Michelle Carter, Elizabeth Dang, Anthony
Fiano, Alec Friedhoff, Michael Gaynor, Chris Howie, Julia Kraeger, David Lanham, April McWilliams, Erin Raftery,
Karen Slachetka, Reda Urmanaviciute, and Luisa Zottis at Brookings.

Brookings Metropolitan Policy Program                                                                         Page 14
MORE INFORMATION
About the Indiana GPS Project
Coordinated by the Central Indiana Corporate Partnership (CICP), the Indiana GPS Project is a series of
multidimensional reports on Indiana’s economy. It is designed to inform public policy and business priorities that will
spur economic growth in Indiana, including through recommendations about how to increase the number of good
jobs available to Hoosiers. The research project, which began in August 2019, has been spearheaded by CICP and
conducted in collaboration with the Brookings Institution’s Metropolitan Policy Program and the American Enterprise
Institute.
To learn more, visit Indianagpsproject.com.

About the Brookings Metropolitan Policy Program
The Brookings Metropolitan Policy Program delivers research and solutions to help metropolitan leaders build an
advanced economy that works for all.
To learn more, visit brookings.edu/metro

For more information:
Mark Muro
Senior Fellow
Metropolitan Policy Program at Brookings
mmuro@brookings.edu

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EXECUTIVE SUMMARY

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